The new Apple TV is a major hardware upgrade. One quarter the size of its predecessor, it’s a small black box with curved edges, somewhat resembling a hockey puck. The highlights: It costs $100, and it integrates nearly instant streaming TV and movie rentals, along with Netflix streaming.

So calling it a “hobby” was right — Apple’s starting out small, and maybe it’ll roll into something bigger if more studios warm up to the idea.

Nonetheless, I got some hands-on time with the new Apple TV and it is a promising start.

TV and movie rentals are really snappy and fast. After choosing to rent a movie or show, the Apple TV takes a few seconds to prepare a buffer and begins streaming your video live.

Also particularly cool was internet integration. I enjoyed searching through Flickr streams: Select a photo and hit the Play button and it immediately plays a slideshow with music and fancy transitions. I’m too lazy to check my friends’ Flickr streams the normal way on Flickr.com, aren’t you? Plus, the photos look great on a big screen through the Apple TV’s HDMI connection.

The Apple TV’s remote is familiar: It’s got the same aluminum and black design as the current MacBook Pros. It’s also very similar to the current Apple remote that controls Macs — only it’s a little longer and the buttons have small bumps for subtle tactile feedback. It feels great in the hand and navigating through the Apple TV menu was really smooth.

As good as the idea sounds, you won’t be able to use your iPhone or iPad as a remote for the Apple TV (not yet, at least). Instead, there’s a feature called “AirPlay,” so if you’re using your iPad or iPhone to listen to music, look at photos or watch a video, you can tap an AirPlay button, select your Apple TV and boom — your content is streaming onto your Apple TV. We weren’t able to test that since this feature won’t be available until iOS 4.2 ships in November, but we’ll keep you posted.

You can also stream media from your Mac’s iTunes library by choosing the “Computer” option and selecting a movie or playlist. I tested that out too, and it worked fine, but do note that iTunes only supports a few formats for video (.H264, for instance). So if you prefer getting media through some alternative non-iTunes-compatible means, you’re still going to be doing a lot of file conversion before you can watch your videos on the Apple TV.

All in all, it’s a cool device, and for $100 it’s going to pose a serious threat to the Roku Netflix player. But as a TV replacement, it’s still not there yet. Maybe later.

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